Edmond Mak, a fellow classmate posted an interesting blog on the importance of accounting.  It seems that there are a never-ending number of cases involving fraudulent financial reporting.  Enron, WorldCom, and Tesco highlight the corruption and greed of corporate management.  However, the blame is not just on developing better accounting standards.  The external auditors should share the blame.

 

The purpose of financial accounting is to provide relevant, timely, and useful information to external stakeholders.  By requiring all reporting companies to comply with one set of rules or standards, we can ensure that users are getting relevant information.  Accounting standards allow the financial market to compare one company’s performance and financial strength against another.  However, if management is determined to manipulate and fraudulently state their financial statements, accounting standards alone will not bring this to light.  This is why publicly traded companies are required to have their financial statements audited. The role of the external auditor is to measure the compliance of the company’s financial statements against the standards to which it is required to follow.  Auditors are independent from management and do not serve the corporation.

 

Even though Edmond highlighted the importance of accounting standards, the elimination or reduction of accounting fraud requires auditors to set up and protect the public.

 

Today, it is surprising to see that we still struggle with gender equality issues.  With increasing number of women entering business schools, we would expect more women in the boardrooms of America.  However, it seems that Corporate America has not moved into the 21^st century.  The Old Boys Club is still strong and thriving.

 

In time, this tide will turn based on two influential forces.  First, market forces will elevate the role of women in the corporate boardrooms.  Although women make up 50% of the consumer market, they actually do more than half of the buying.  If businesses are to appeal to this market segment, it will need women leaders to relate to these consumers.

 

The second force is the attitude of women.  I do not believe that women can be legislated into the corporate boardrooms. Governments are mandating gender equality legislation.  Governments are setting quotas for companies to hire based on sex, ethnic diversity, and disability.  Women should not expect this kind of advantage to secure the corner office.  If women want to earn the respect of the corporate world, they need to perform.  I believe that women can add value and boost corporate bottom lines.  Women will enhance collective intelligence by bringing a different perspective.

Jon Loomer, the “Facebook Marketing Guru”, has written blog posts on utilizing the Facebook platform to generate higher traffic to websites. He is an expert in the creating effective Facebook ad reports and custom audiences for multiple websites.  Jon Loomer is a pioneer in social media consulting but I believe his true business model is the proven formula of building brand and developing a strong value proposition.

 

Mr. Loomer has a fascinating personal story of success and perseverance.  After several lay-offs and struggles in the corporate world, he found a way to redefine himself and create a self-sustaining business.  He leveraged his knowledge of the Facebook platform and branded himself as an expert.  His business was successful because he developed a value proposition around his brand to meet a very specific need in the market.  By identifying a specific target segment, showcasing his brand and expertise, and demonstrating how he can bring a point of difference to benefit that segment, he showed that he can add value to potential clients.

 

Mr. Loomer’s story taught me that you do not need to have a large capital base to start a successful business, and need not follow the traditional path of climbing a corporate ladder.  The key to success is hard work and creating a value proposition to fulfill a niche in the market.

 

 

Canada has enjoyed significant economic growth and prosperity because of its established financial infrastructure and stable geopolitical environment.  Our banking, communication and transportation systems, and stable democracy allow commerce to thrive.  However, the issue of First Nation rights may significantly alter the stable geopolitical environment.   Sound business decisions cannot be made with pending uncertainty surrounding land claims.  Decisions on BC Hydro’s Megaproject, the Northern Gateway Pipeline, and the Taseko Gold Mine project can be stalled for years.

 

Business leaders may feel undue frustration in the slow negotiations of land claims.  Their well-devised business plans are not carried out due to forces out of their control.    Business leaders need to understand that in order to thrive, they need to address more than the traditional issues of supply chain, distribution channels and marketing.  They also need to consider societal and cultural trends, political uncertainty, and First Nation land claims.  Furthermore, they need to address the concern of all stakeholders as argued by Edward Freeman.  The regulators, First Nations people, and environmentalist are just as much a stakeholder as the shareholders and creditors.

 

Our forefathers laid down the road by developing transportation and banking systems, which benefit businesses today.  The business leaders of today need to make sacrifices by negotiating land claims and addressing environmental issues for the benefit of tomorrow’s business leaders.

 

 

Ian Paul stated that FIFA correctly stripped Hamman of his executive committee position but should have also stripped Qatar of its right to host the World Cup.  Since organized sports involves billions of dollars, there will always be corruption and undue influences.  To change this unethical behavior, we need more than policing and punishment.  We need a cultural shift.  Business and organizational leaders need to set the tone and be the example.  However, since everyone makes mistakes, organizations need to develop policies to foster better behavior.

 

Whether Hamman purposely or inadvertently used his position to benefit Qatar is unknown.  If FIFA is serious about cleaning up its image by eliminating undue influences and ensuring a fair and ethical process, it needs to develop a policy of transparency and guidelines in conflict of interest.  The fact that Hamman was on the executive committee of FIFA gives him access to certain information that could be used to Qatar’s advantage.  This is obviously a conflict of interest.  Policies should be set up to prevent individuals with access to privy information from participating in the bidding process.  Furthermore, if rules on transparency were in place, all parties involved can assess and determine if other dealings have an undue influence on their decisions.  These policies will foster better leaders for tomorrow.

 

 

There has been a long standing debate as to whether there is a place for government in business. Some argue that government should stay out of business and let the free enterprise market drive itself.  The most efficient and effective companies will survive while the inefficient ones will be pushed out of the market.  Others argue that businesses need regulators to police and regulate business practices.  For examples, government regulators should govern the sales of cigarettes, as they affect the health of society.  They argue that government regulators should apply tariffs to protect local jobs.  Whether they should intervene or not, the government must remain relevant and understand the current business practices.  This requires that the government utilize technology so they can keep up with businesses. Regulators cannot rely on 50 year old rules to govern the changing world.  CRTC is trying to regulate a dying industry while the world has moved ahead to the next generation in communications. This regulator is thinking in the 1970’s and applying their thinking to the 2020’s. Therefore, if the government wants to have a meaningful role in the market, they must keep up with fast growing businesses.  If they are unable to do so, they should get out and let the market run free.